Unlike other car manufacturers who sell through franchised dealerships, Tesla uses direct sales to ensure that the car is purchased at the lowest possible price for the customer. Meanwhile, other automakers seem to be completely uninterested in this, and are happy to use the services of dealerships, which charge customers an average of 5 to 35% over of the cost of the car.
A small car like a Toyota Corolla or Mazda3, for example, will have a fairly small markup between invoice and retail price—often around 5%. More expensive as well as in-demand cars can have much higher markups, often in excess of 10%. Hot, new vehicles can have even more crazy Additional Dealer Markups (ADMs), reaching over 35%.
Almost every time a hotly anticipated, new or redesigned vehicle hits dealerships for the first time, a number of enterprising dealerships will seize the opportunity to generate additional profits, which, surprisingly, doesn't bother automakers in any way.
For example, the Ford Mustang Mach-E electric crossover, with a MSRP of $43,895, gets between $5,000 and $15,000 for the ADM alone, a whopping 35% more than its base MSRP. For the sake of clarity, customers pay such a markup for the fact that the automaker does not want to take full responsibility to its customers for the sale of its cars and related hassle. It is worth emphasizing here that Ford Mach-E customers will not receive enhanced performance for their extra money spent, rather the extra cash simply goes right to the dealership. Sounds absurd, doesn't it?
In contrast, Tesla takes real care of its customers by making its cars as efficient as possible, and selling them without markup. When buying a car from the company you will not pay any extra charges for the fact that it was sold to you. And you get exactly what you ordered at the transparent price that was listed.
Tesla has created an international network of showrooms and galleries. Customers who can take advantage of them will not pay any markups, further contributing to a better customer shopping experience. Unlike car dealerships, there is no conflict of interest, because customers only deal with Tesla employees. Furthermore, the company also offers the simplest and fastest way to place an order, directly through its website. With no haggling, and practically no effort spent, you save one of the most precious human resources: time.
© 2020, Eva Fox. All rights reserved.
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About the Author
Eva Fox joined Tesmanian in 2019 to cover breaking news as an automotive journalist. The main topics that she covers are clean energy and electric vehicles. As a journalist, Eva is specialized in Tesla and topics related to the work and development of the company.